The move was aimed to clamp down on rampant corruption, Modi said.
After the said date, the currency notes of Rs 1,000 and Rs 500 would be only paper, with no value, said the PM in his address to the nation. They would cease to be legal tender from the midnight of November 9.
There would be no change in any other form of currency exchange, whether cheque, demand draft or payment via credit and debit cards etc, said Modi.
The surprise step appears to be designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy. "Black money and corruption are the biggest obstacles in eradicating poverty," Modi said in his address to the nation.
New 500 and 2,000 rupee denomination notes will be issued later, he added.
ATMs would not work tomorrow and all banks will stay shut for public work for the day.
If you are unable to deposit your Rs 1,000 and Rs 500 notes by December 30 for some reason, you could exchange the notes until March 31, 2017, by furnishing your ID proof.
The prime minister also announced that Rs 2,000 denomination would be introduced.